After much struggle and angst, I managed to get the "call" in Treasury bonds correct. This appears to be a secular, sustainable move towards lower yields or higher bond prices. Long term Treasury bonds have been consolidating that initial move over the past 6 to 7 weeks, and they appear to be breaking out again.
So why do I think long term Treasury bonds are going higher? Look at a daily chart (see figure 1) of the Ultra Short 20 + Year Treasury ProShares (symbol: TBT). This is a 2x leveraged ETF product that tracks inversely to the daily performance of the Barclays Capital 20+ Year U.S. Treasury index. The black dots are key pivot points, and TBT is breaking below a key pivot point (i.e., support level) in an established down trend. This is bearish for TBT, which is bullish for bonds.
Figure 1. TBT/ daily
Figure 2 is a daily chart of the i-Shares Lehman 20 + Year Treasury Bond Fund (symbol: TLT). This ETF tracks the Barclays Capital 20+ Year U.S. Treasury index. The indicator in the lower panel is the on balance volume indicator with a 40 day moving average, and TLT is under accumulation. The black dots are normal pivot points, and these show a series of higher lows, which is bullish.
Figure 2. TLT/ daily
This week the equity markets are looking a little "stressed". Within the context of a possible failed signal in equities, Treasury bonds are starting to look attractive once again.
2 comments:
Guy, the fact that (until I voted with a 5) you only had a one star rating on this sensible post informs me just how far this secular bull market in Treasuries has to run. Everyone hates them and as an investment class the long dated version is still seriously under owned.
hettygreen:
well that is a poll of 1, but if I were to fairly evaluate the charts, this is what I see
wasn't it only 3 months ago that higher treasury yields was the can't miss trade of the decade ....maybe later, but not now
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